Florida renters finding a tough market

Published: Tuesday, April 1, 2014 at 1:00 a.m.

Last Modified: Tuesday, April 1, 2014 at 12:35 a.m.

It's an expensive time to be a renter in Southwest Florida, and that reality doesn't appear as if it will change any time soon.

The cost to rent an apartment in Sarasota and Manatee counties is rising at more than double the national average, with Southwest Florida boasting one of the highest occupancy rates in the U.S. during February, new figures show.

Although the rental market has softened some from a peak last year, a lack of units for lease and strong demand for those available are expected to further boost the cost of monthly rent for at least another two years.

“Our phones are ringing off the hook, and we're renting everything we have out there,” said Scott Corbridge, broker at Sarasota Management & Leasing. “It's a great time to be a landlord.”

The local gains are consistent with surging rental markets across the country, especially in California and Florida, where job markets are rebounding but the ability to buy a home is still out of reach for many.

Apartment occupancy in the North Port-Bradenton-Sarasota metropolitan statistical area dipped to 96.33 percent in February, down only slightly the same time last year, according to data from industry researcher Axiometrics Inc.

The region's occupancy remains more than two percentage points above the U.S. average, ranking Southwest Florida among the most competitive rental markets in the nation.

“Our vacancy rate is less than 2 percent now — it's just been very strong,” said Andrew Harrington, broker of Oak Leaf Property Management in Manatee County. “The stuff that's available moves quick, which means we can charge higher prices. Our investor owners are very happy right now.”

Industry analysts attribute the recent moderation in occupancy rates to institutional investors, who have saturated the market with single-family rentals that in many cases had been vacant because of foreclosures.

But new mortgage regulations expected to make it more difficult for first-time homebuyers to get loans could offset more inventory with greater demand.

Rents already are climbing. The monthly rent on a year-long lease in the Sarasota-Bradenton area has jumped 5.22 percent over the year, to reach an average of $1,002 in February.

But that growth also is down slightly from the 6.85 percent rent increases during the same period in 2013.

Even so, the region remains one of just 21 markets nationwide where residential rents are appreciating by more than 5 percent each year.

Naples led the country with annual effective rent growth of 13 percent in February, followed by Odessa at 11.5 percent; Santa Rosa, Calif., at 9.4 percent; Oakland, Calif., at 8.6 percent; and San Francisco at 8 percent.

By comparison, the national average was 2.8 percent.

As the cost to buy homes also rises, amid relatively stagnant wages, there have been growing questions about whether housing costs are rising out of reach.

“Affordability could be an issue with so many high-priced units coming to the market,” said Jay Denton, vice president of research for Axiometrics. “The next few quarters will be telling.”

The sustained increases in rents come as a result of basic supply and demand.

In the immediate aftermath of the financial meltdown, the supply of apartments here and elsewhere dwindled.

Many of the area's larger complexes were converted to condos during the real estate boom and a lack of financing for development froze new apartment construction throughout the Great Recession.

Meanwhile, demand from renters spiked as many homeowners were evicted because of foreclosures. The volatility of the housing market — and the inability to secure necessary credit — also kept many young Americans from buying.

That rental supply is now making a slow comeback, with 932 new units expected to be made available this year, and another 576 units planned in Sarasota-Bradenton for 2015, Axiometrics reported.

That “identified supply” measures projects already under construction. More developments could break ground during the next 18 to 24 months, pushing that estimate higher.

But added inventory may not help to reduce rental prices all that much.

That is because this new supply is slated for urban cores and in the form of Class A properties, which tend to be more expensive and luxurious than typical apartments, the Axiometrics research shows.

In Southwest Florida, recent apartment development has migrated to Lakewood Ranch, the master-planned community that straddles Sarasota and Manatee counties.

There, a Winter Park developer is adding 256 units to its existing Lost Creek Apartments, and a subsidiary of Atlanta-based Davis Development plans to build a 280-unit apartment complex at Pope Road near State Road 70.

“We have always known we needed more apartments on the ranch, and we're working on that now,” said Jimmy Stewart, vice president of sales for LWR Communities, an affiliate of Lakewood Ranch master developer Schroeder-Manatee Ranch.

Customers have been across the board, Stewart said: “Students, people who are rebuilding credit, and a generation that doesn't even know if they want to own a home.”

<p>It's an expensive time to be a renter in Southwest Florida, and that reality doesn't appear as if it will change any time soon.</p><p>The cost to rent an apartment in Sarasota and Manatee counties is rising at more than double the national average, with Southwest Florida boasting one of the highest occupancy rates in the U.S. during February, new figures show.</p><p>Although the rental market has softened some from a peak last year, a lack of units for lease and strong demand for those available are expected to further boost the cost of monthly rent for at least another two years.</p><p>“Our phones are ringing off the hook, and we're renting everything we have out there,” said Scott Corbridge, broker at Sarasota Management & Leasing. “It's a great time to be a landlord.”</p><p>The local gains are consistent with surging rental markets across the country, especially in California and Florida, where job markets are rebounding but the ability to buy a home is still out of reach for many.</p><p>Apartment occupancy in the North Port-Bradenton-Sarasota metropolitan statistical area dipped to 96.33 percent in February, down only slightly the same time last year, according to data from industry researcher Axiometrics Inc.</p><p>The region's occupancy remains more than two percentage points above the U.S. average, ranking Southwest Florida among the most competitive rental markets in the nation.</p><p>“Our vacancy rate is less than 2 percent now — it's just been very strong,” said Andrew Harrington, broker of Oak Leaf Property Management in Manatee County. “The stuff that's available moves quick, which means we can charge higher prices. Our investor owners are very happy right now.”</p><p>Industry analysts attribute the recent moderation in occupancy rates to institutional investors, who have saturated the market with single-family rentals that in many cases had been vacant because of foreclosures.</p><p>But new mortgage regulations expected to make it more difficult for first-time homebuyers to get loans could offset more inventory with greater demand.</p><p>Rents already are climbing. The monthly rent on a year-long lease in the Sarasota-Bradenton area has jumped 5.22 percent over the year, to reach an average of $1,002 in February.</p><p>But that growth also is down slightly from the 6.85 percent rent increases during the same period in 2013.</p><p>Even so, the region remains one of just 21 markets nationwide where residential rents are appreciating by more than 5 percent each year.</p><p>Naples led the country with annual effective rent growth of 13 percent in February, followed by Odessa at 11.5 percent; Santa Rosa, Calif., at 9.4 percent; Oakland, Calif., at 8.6 percent; and San Francisco at 8 percent.</p><p>By comparison, the national average was 2.8 percent.</p><p>As the cost to buy homes also rises, amid relatively stagnant wages, there have been growing questions about whether housing costs are rising out of reach.</p><p>“Affordability could be an issue with so many high-priced units coming to the market,” said Jay Denton, vice president of research for Axiometrics. “The next few quarters will be telling.”</p><p>The sustained increases in rents come as a result of basic supply and demand.</p><p>In the immediate aftermath of the financial meltdown, the supply of apartments here and elsewhere dwindled.</p><p>Many of the area's larger complexes were converted to condos during the real estate boom and a lack of financing for development froze new apartment construction throughout the Great Recession.</p><p>Meanwhile, demand from renters spiked as many homeowners were evicted because of foreclosures. The volatility of the housing market — and the inability to secure necessary credit — also kept many young Americans from buying.</p><p>That rental supply is now making a slow comeback, with 932 new units expected to be made available this year, and another 576 units planned in Sarasota-Bradenton for 2015, Axiometrics reported.</p><p>That “identified supply” measures projects already under construction. More developments could break ground during the next 18 to 24 months, pushing that estimate higher.</p><p>But added inventory may not help to reduce rental prices all that much.</p><p>That is because this new supply is slated for urban cores and in the form of Class A properties, which tend to be more expensive and luxurious than typical apartments, the Axiometrics research shows.</p><p>In Southwest Florida, recent apartment development has migrated to Lakewood Ranch, the master-planned community that straddles Sarasota and Manatee counties.</p><p>There, a Winter Park developer is adding 256 units to its existing Lost Creek Apartments, and a subsidiary of Atlanta-based Davis Development plans to build a 280-unit apartment complex at Pope Road near State Road 70.</p><p>“We have always known we needed more apartments on the ranch, and we're working on that now,” said Jimmy Stewart, vice president of sales for LWR Communities, an affiliate of Lakewood Ranch master developer Schroeder-Manatee Ranch.</p><p>Customers have been across the board, Stewart said: “Students, people who are rebuilding credit, and a generation that doesn't even know if they want to own a home.”</p>